One of Houston’s Fastest Growing Private Companies Crashed

“All too frequently, we learn of the horror stories individuals or businesses have had when they experience major losses. Sometimes it is the loss of property, personal health or injury or loss of assets. For some, those losses could have been avoided or minimized. Recently, one of Haun Mena’s associates shared with us the following first-hand experience she had as a small business owner and the devastating effect it had on her firm.”

Ryan Haun

Phoenix Staffing and Consulting, our family-owned business, was enjoying the prospects for the continued growth of our firm after being named one of Houston’s Top 100 Fastest Growing Firms for three consecutive years. We had five offices in three Texas cities and over 2,000 field employees working domestically and internationally. The sky seemed limitless … until my Vice President of Operations met me in the hall of our Galleria office. She was pale and appeared to have aged twenty years since I had last seen her twenty minutes before. In that twenty minutes. she had received a call from a field employee indicating that her payroll check had been declined at the bank.

A phone call to our bank confirmed that the bank account had over drafted following multiple items being presented and paid. Review of the check numbers revealed that the bulk of those items had not been issued by our company. We contacted the bank’s security officer and froze all account activity. Upon examination, the items that had “cleaned out the account” were not issued through our offices but were on what appeared to be our corporate checks. HPD’s forgery division was called in and a six-month long investigation began.

The firestorm that followed outlasted the investigation, but business obligations and contracts had to be honored. Vendors, taxes, hundreds of employees on hundreds of jobs with our private and public-sector clients had to be paid.

Additionally, we assumed responsibility for any collateral damage our employees had incurred (fees, penalties, and late payments they experienced for their personal returned items). To say it was a mess would be a gross understatement. The bank and HPD ultimately determined our firm, like four others in Houston, had been targeted by the same organized crime group. The group had ordered checks exactly like ours, used the same routing number and placed the order with the printer that provided checks to our banking institution. The counterfeited checks were mailed to a blind post office box where the counterfeiters then wrote the checks and forged the signatures.

Now that we knew the source of the crime, I filed a claim with my insurance company. Response: “DENIED”. Why? My coverage applied only if the criminal act had been an “inside” job rather than one committed by a third party.

My failure to assess fully all of the risks that my business might encounter and failure to protect it resulted in personal and family losses of over a million dollars. A successful acquisition saved the business and The Phoenix rose from its literary ashes, but the personal investment and assets were non-recoverable.”

In retrospect, what we had was a failure to properly insure.


How can you be sure you are properly insured?

Protect your business with these insurances

  1. Professional Liability Insurance
  2. Property Insurance
  3. Workers’ Comp Insurance
  4. Home-based Businesses
  5. Product Liability Insurance
  6. Vehicle Insurance
  7. Business Interruption Insurance
  8. Crime and Fidelity Insurance

Seven ways to protect your business from cyber crime

  1. Protect Credit Cards and Bank Accounts
  2. Secure Your IT Infrastructure
  3. Use a Dedicated Computer for Banking
  4. Have a Password Policy
  5. Educate Your Staff
  6. Consider Employee Background Check
  7. Insure Your Business